KLCI Stock - HOMERIZ / 5160 - 2010 Quarter 4

Market Cap : 200000000*0.5 = 100,000,000 (Small)
NTA per share : 57244/200000 = 0.29
P/BV : 0.5/0.29 = 1.7241
Forecast P/E now : (0.5-0.04)/0.0828 = 5.56 (Moderate)
ROE : 35.03%
DY : 0.04/0.5*100 = 8% (High)
Fixed Asset Turnover(3 year) : 1.5096 (High)
Liquidity Ratio : 44545/10161 = 4.3839 (Strong)
Receivables Collection Period : 7438*365/109969 = 24 days (Good)
My Target Price : 0.5+0.04 = 0.54 (PE 6, EPS 0.0828, DPS 0.04)
My Decision : NOT BUY unless price below 0.48
My Comment : Revenue and profit decreasing, good cash flow, below moderate debt and decreasing, navps increased, inventory and receivables increased, strengthening of MYR, new manufacturing factory in Vietnam will begin operations by the second half of this year, most Europe index increasing
Technical Support Price : 0.44
Risk Rating : HIGH

My notes based on 2010 quarter 4 report (number in '000):-

- The Group revenue for the current quarter under review decreased by 7.0% from preceding quarter. Consequently, the Group profit before tax decreased by 9.8% as compared to the preceding quarter

- The decrease in revenue was mainly due to the lower customer order received as a result of the economic uncertainties in Europe arising from the recent economic crisis and the strengthening of Malaysian Ringgit

- In FY2009, revenue recorded RM108.4 million and profit RM22.7 million
- In FY2008, revenue recorded RM92.6 million and profit RM12.4 million
- In FY2007, revenue recorded RM73.8 million and profit RM10.5 million

- Revenue regions percentage: Europe-60%, Australasia-26%, North & South America-8%, Others-6%

- Revenue products percentage: Upholstered Sofas-55%, Upholstered Dining Chairs-30%, Upholstered Bed Frames-13%, Others-2%

- Dividend policy envisage not less than 40% of net profit, intends to recommend and distribute at least 50% of net profits

- Estimate next 4Q eps after 2010 Q4 result announced = 0.0207*4 = 0.0828, estimate PE on current price 0.5 = 5.56(DPS 0.04)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0242*4*0.95 = 0.092, estimate highest/lowest PE = 6.47/4.35 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0268*4*0.95 = 0.1018, estimate highest/lowest PE = 6.04/4.91 (DPS 0.04)

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